Kmart To Sell Stores To Sears

54 Outlets May Change Hands In $621m Deal

July 1, 2004|By Jeannine Defoe Bloomberg News and Business Writer Mark Chediak contributed to this report.

Kmart Holding Corp., the No. 3 discount retailer, will sell as many as 54 stores to Sears, Roebuck and Co. for about $621 million as Kmart Chairman Edward Lampert sheds larger outlets to focus on clothes and housewares.

A spokesman from Kmart also would not disclose if stores in South Florida would be sold. Sears, Roebuck and Co. said through a spokesman that it was planning on purchasing stores in the Southeast, but would not confirm if that included stores in South Florida. The sale follows the discounter's decision last month to sell as many as 24 stores to Home Depot Inc. for $365 million. Kmart shares rose 5.3 percent.

Lampert, who bought about half of Kmart after it filed for bankruptcy in 2002, is selling stores and trimming merchandise to reduce competition with Wal-Mart Stores Inc., the world's largest retailer. Cost cuts have helped swell cash reserves to $2.2 billion at Kmart, whose shares have more than tripled since they resumed trading last June on the Nasdaq Stock Market.

"Mr. Lampert hasn't done too much wrong," said Barry Klein, head of Barry Klein Realty Enterprises, a retail consulting and development firm in Farmington Hills, Mich. "If he can make money by selling stores, more money than the stores would have made, he'll do it. He is taking not just one point of view in looking at what Kmart's potential is."

Kmart, which has more than 1,500 stores in 49 states, closed 599 stores, fired 57,000 workers and wiped out $7.8 billion in debt by reorganizing following its January 2002 bankruptcy, the largest ever for a U.S. retailer.

In South Florida, Kmart has closed three stores in Palm Beach County, three stores in Broward County and two stores in Miami-Dade County. Kmart has six stores remaining in Palm Beach County, seven stores in Broward County, and 10 in Miami-Dade County.

Since exiting Chapter 11 in May 2003, Kmart has returned to profit by cutting costs as sales declines have continued into a third year.